General Electric is under investigation by the Securities and Exchange Commission.

GE said on Wednesday that regulators are investigating a $6.2 billion insurance loss that the company revealed last week. The disclosure is a new and potentially much more serious problem for a company already reeling from missteps and questionable management decisions.

Advertisement

The SEC is also investigating the company's accounting, chief financial officer Jamie Miller told analysts during a conference call. Specifically, she said the agency is looking into "revenue recognition and controls" for the company's long-term service agreements.

"We are cooperating fully with the investigation, which is in very early stages," Miller said.

GE said it will restate its 2016 and 2017 quarterly numbers to reflect new accounting standards.

The SEC declined to comment.

GE shocked Wall Street last week by taking a $6.2 billion hit from insurance problems at GE Capital, the lending business that nearly ruined the company during the financial crisis. GE further warned it will have to devote $15 billion to boost insurance reserves at GE Capital.

GE said the SEC is probing "the process leading to the insurance reserve increase" as well as the fourth-quarter loss.

The unexpected insurance loss led investors to fear what other problems might be hiding on GE's massive balance sheet. It was especially surprising because GE exited most of its insurance business by 2006. GE hasn't taken on new long-term-care insurance policies in more than a decade.

GE is facing a cash crisis that analysts blame on years of terrible deal-making, murky accounting and needless complexity.

Most of those decisions were made under former CEO Jeff Immelt, who was replaced last year by GE veteran John Flannery. A spokesman for Immelt was not immediately available to comment on the SEC investigation.

Miller, who was promoted to CFO last year, said an ongoing "very deep review" of GE's books has thus far uncovered "nothing here that I'm overly concerned about."

In 2009, the SEC charged GE with accounting fraud, alleging the company used "overly aggressive accounting" to make false and misleading statements to investors. GE paid $50 million to settle the charges. It neither admitted nor denied wrongdoing.

Beyond the new SEC investigation, GE faces other legal troubles in its lending unit. GE Capital's discontinued subprime mortgage business, known as WMC, is under investigation from the Justice Department. The government is probing WMC's pre-crisis sale of subprime loans.

GE, which sold WMC in late 2007, has set aside $400 million to cover the subprime mortgage problems. Miller said GE has not yet had "substantive discussions" with the Justice Department.